Illegality of employment frustrates contract

Legislative changes made security guard’s licence invalid so employer dismissed him
By Nikolay Chsherbinin
|Canadian Employment Law Today|Last Updated: 02/22/2012

Frustration of an employment contract occurs whenever the law recognizes that, without the fault of either party, a contractual obligation cannot be fulfilled. Physical disability, commercial impossibility, or changes in legislation are frustrating events, which may excuse a non-performance of contractual duties without liability. In considering the latter eventuality, the Ontario Divisional Court in Cowie v. Great Blue Heron Charity Casino resolved that an employment contract could be immediately frustrated if the frustration was induced by supervening changes in legislation that made an employee’s continued employment illegal. Cowie drew a bright line between frustrations caused by illness or disability and illegality, where the former entitles and the latter disentitles employees to severance.

In 2000, Great Blue Heron Charity Casino in Port Perry, Ont., hired George Cowie as a security guard. Cowie’s employment contract required him to be licensed by the Ontario Gaming Control Commission. On June 9, 2005, Cowie was promoted to the position of Security Training Officer and on April 4, 2007, his position was re-classified to Team Leader.

In August 2007, the Private Security and Investigative Services Act, 2005 (PSISA) came into effect, adding additional licensing requirements for security guards. Section 10(5) of the PSISA requires guards to have a “clean criminal record.” On Aug. 13, 2008, Cowie was informed that he was ineligible to hold a PSISA licence due a break and enter conviction in March 1983, for which he had yet to be pardoned. Since employing Cowie without a licence constituted an offence under the PSISA, the casino informed Cowie on August 21, 2008, that their employment contract had been frustrated. No wrongdoing on Cowie’s part was alleged nor any pay in lieu of notice was given. Predictably, Cowie sued for wrongful dismissal. He won at trial, but lost on appeal.